As a fan of Thomas Sowell‘s original version of Applied Economics, a book designed to help people remember to think beyond proposed policies’ short-term consequences, I’ve been looking forward to the new “revised and enlarged” edition.
Sowell does not disappoint. In the first chapter, his discussion of Franklin Roosevelt’s economic policies should sound some warning bells among staffers in the current presidential administration.
FDR seems never to have considered that incessant experimentation, in and of itself, was a process which could have high costs for the economy, irrespective of the merits or demerits of particular experiments. Government experimentation is different from private experimentation which, for better or worse, affects only those who engage in it, and who have every incentive to stop when it becomes clear that the experiment is not working. But government experiments with the rules under which millions of other people must operate, and the prospect that the basic rules of the economy are likely to continue changing without notice at any time, is not a prospect that encourages long-term investment by businesses or even short-term spending by consumers. People tend to hang on to their money when they don’t know what is likely to happen next.
Joe Coletti made a similar point earlier this month when reacting to North Carolina’s January unemployment figures.
